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September 21, 2022

Should Not-For-Profit Cultural Attractions Emulate Disney’s Recent Pricing Strategy Behavior?

Disney World

By: Zachary Winfield and Gabe Buckley

Late in August, the Wall Street Journal published a story on a series of big changes at two gems in Walt Disney Co.’s crown: Walt Disney World Resort and Disneyland Resort. The article, by WSJ staff writers Robbie Whelan and Jacob Passy, detailed the significant shifts in pricing strategy that were put into place at the two properties in the aftermath of the pandemic.

Our best attempt to objectively describe the changes in simple terms is this: Disney is leveraging supply and demand, which in practice means higher prices, fewer visitors in its parks, and a different experience for guests. Whether that experience is better or worse depends on who you ask, but it has resulted in the parks’ best financial performances ever. In this article, Canopy’s Vice President Zachary Winfield and Business Analyst Gabe Buckley share their point-counterpoint on whether not-for-profit cultural attractions should emulate Disney’s behavior.

By: Zachary Winfield

It’s only a matter of time until not-for-profit cultural attractions are emulating the strategies that Disney has put into place over the past year. This inevitability stems from a growing realization within our industry that to make real progress towards the ambitious goals we’ve set out to accomplish, we’re going to have to be more aggressive, perhaps much more aggressive, with how we improve our financial posture.

Research on conservation-based cultural attractions bears out time and again that the primary reason people visit these attractions is to spend quality time with their families. Above all, our visitors are looking to have fun. But this truism is in stark contrast to the stated conservation goals of zoos, aquariums, and botanic gardens. While they articulate it in innumerable different ways, these organizations are essentially trying to save the natural world, and you know what that requires? Money. A lot of it.

Operating a visitor attraction is a zero-sum game. There’s no safety net. For every dollar you spend, you must generate one. But these organizations are competing for shares of minds and wallets with one hand tied behind their back, because every dollar spent on conservation education programs is one that can’t be spent on marketing, or capital projects, or other revenue generators. The for-profits of the world face no such limitation. Therefore, conservation organizations need to redefine their relationship with revenue operations and start asking hard questions like:

  • Are we charging admissions fees commensurate with our product? Financial accessibility is important, but if we aren’t willing to leverage our strongest lever for profitability (our front gate), how do we expect to meet rising expense obligations?

  • On second thought, what do we really mean by “financial accessibility?” If we’re conservation organizations first, is our ability to create meaningful impact really strongest inside our gates? There’s research that supports our assumption that constituent behavior is changed by a visit. But is it possible that our best opportunity is to leverage our facilities as revenue generators to support non-guest-facing conservation work outside of our gates? If so, the Disney model of fewer guests at higher prices starts to make a lot of sense.

  • Does the entire concept of “membership” need an overhaul? This one keeps me up at night—what if our traditional understanding of a membership program needs to be entirely thrown out the window? It’s not difficult to make a mathematical case that membership is little more than a huge discount on admission, and that the “annual pass” paradigm would be much more advantageous despite our fears about constituent backlash. That would mean higher prices and less generous benefits. In observing their changes in strategy, one can infer that Walt Disney Co. has arrived at a similar conclusion.

I don’t mean to imply with these questions that not-for-profit cultural attractions have it wrong, but I do think there’s something to be gained in having some uncomfortable conversations. Disney has taken their fair share of flack, but the impact on their bottom line is undeniable. While our “bottom line” is defined differently, is it unrealistic to think that some similar strategies might work for us, too?

By: Gabe Buckley

It’s easy to be envious of Disney’s record sales and profits. If money were no object, we would certainly recommend that all our clients develop a functional, sales-driving app–one that tracks visitors throughout the site and upsells specialized experiences, retail goods, and concessions at just the right moment. While you’re at it, put in a few dozen kiosks for ticket and food sales. Obviously, you’ll have to develop RFID wristbands that operate the kiosks, conveniently linked to a guest’s credit card so they can make purchases without ever getting their wallet out. When you’re done with that, don’t forget to cut out any excess benefits you’re giving to members and frequent visitors. It’s far more lucrative to get tourists—who will spend 8+ hours and thousands of dollars on concessions and merchandise—to fill the park.

Unfortunately, money is an object. Disney can be Disney because they run a multi-billion-dollar enterprise. They are literally losing billions of dollars a year on the Disney+ streaming service—and that is part of their strategy! Even if you could afford to implement all the changes Disney has made, would your organization generate that same demand? It’s hard to beat “the most magical place on Earth.” Disney has spent the last 100 years weaving itself into the global fabric of society. As mentioned in the WSJ article, Disney even has a “love-hate” relationship with their annual passholders (i.e., members). Disney knows that on any given day, for every passholder that doesn’t show up, there’s a tourist ready to take their place. A tourist willing to shell out loads more money on concessions and likely stay in the hotel. Thus is the law of supply and demand.

Beholden mainly to its shareholders, Disney plays in a different league (with a different set of rules) than its peers in the not-for-profit realm. It’s primarily a revenue-generating enterprise (the company made over $20 billion in 2021), while most of you reading this article are from organizations that are not primarily revenue-generating enterprises. You’re mission-first organizations, with no shareholders, whose primary goals are rooted in conservation education. While we can use many of the tools that Disney has employed, we would be using them in different ways – to learn how our conservation messaging is affecting guests, to ensure that animal wellbeing standards are kept, and ultimately to get our guests to take action outside of our organization to support the conservation movement as a whole.

What it comes down to is this: using technology to track guest experience and generate more revenue is certainly something we all need to be doing. However, Disney’s strategy of nickel-and-diming guests to drastically increase the yield from each visitor only works because there’s massive demand for their product. Unlike Disney, the demand for our “product” is spread across thousands of organizations globally. Thus, compared to Disney visitors, guests to conservation-focused organizations have a much higher price elasticity – if your price is too high, they can get their fill of nature elsewhere. Disney offers an exclusive product with high demand, which is the main reason their ticket prices have increased over 3000% since they opened Disney World only 50 years ago.

Since mission-driven organizations exist with very different guest expectations and tolerances, I think the best lesson we can learn from Disney at this stage in our journey is about immersive story-telling. Like Mickey Mouse and Cinderella, the charismatic megafauna of our institutions (polar bears, sharks, corpse flowers) are the main characters in our story. Mickey and Cinderella drew people into a fantasy world – one that consumers are willing to pay to be a part of. The real question conservation organizations face is a question Disney has already answered – How do we get people so tied up in the story that they’re willing to pay us to be a part of it?

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